Bitcoin Google trends search volumes have reached levels not seen since a year ago, indicating that the masses are quickly shifting their gaze to the cryptocurrency which they’ve been led to believe is a scam.
Meanwhile, several data points indicate that bitcoin’s price-action still has fuel left in the tank in this parabolic run-up, despite increasing downside risk with each leg up.
Let’s dig in.
Several stories have come out on increasing bitcoin search volumes on Google trends. According to an article on CoinTelegraph, as bitcoin extended the rally to $19,412 such trends rose to yearly high levels.
Google trends analysis is typically used in tandem with various sentiment metrics to gauge which part of the cycle we’re in.
Clearly, interest in bitcoin is picking up. However, as price trades at the 2017 all-time highs Google searches are still very modest in comparison.
According to digitalinformationworld.com, Google controls 92% of search engine data, meaning that Google search trends are statistically significant by most standards.
To my mind, the only definite takeaway from this metric is that bitcoin’s macro cycle still has a way to go, even if the risk of a major pull-back is present.
At the time of writing, bitcoin has pulled back to briefly tap $18,600 and is currently back above the $19,100 level.
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Probability to break all time highs is not low
Bitcoin broke out of the $19,000 resistance and is on its way to potentially creating fresh all-time highs. At this time, there is nothing standing between bitcoin and new all-time highs — brief as they might be.
Further top of the last newsletter, various data points from Coinalyze.net provide some insight into the pressures driving bitcoin’s price.
At the time of writing, it’s clear that the spot market has taken over price-action. The ‘spot market’ is also known as the ‘physical market’ where financial instruments are delivered and settled immediately.
Per the above chart, aggregated spot CVD (cumulative volume delta) indicator shows unrelenting buying pressure in comparison to spot buying pressure earlier this month. Market participants are buying bitcoin more aggressively as derivatives markets cool off.
Given the decreasing funding rate, we can deduce that long position exposure is also trending lower since there is less demand to bid up the price on derivative exchanges.
The takeaways are two-fold:
- Derivative traders are either starting to short into spot buys (anticipating a pull back)
- The probability for continued upside is not far fetched since spot buys are moving the market.
In a market that’s still clearly trending to the upside, a cooling derivatives market is a good sign for the bulls as it suggests that traders are not necessarily being taken in by seemingly euphoric price-action.
As bitcoin pushed through $19,000, aggregated open interest didn’t meaningfully increase either, suggesting a general ‘wait and see’ attitude from derivatives traders.
In prior bull runs, breaking all-time-highs led to continued upside — i.e. the official start of a bull market. This is true of every market whether it’s gold, stocks, or something else. While it’s still entirely possible for bitcoin to correct significantly before surpassing all-time highs (which is inevitable), these conditions are not half bad for the bulls.
At the time of publishing, this market is in the hands of spot buyers.
That being said, in the event that bitcoin surpasses $20,100, we could see some major teleports in price. Given that the above parabola has yet to be breached, it’s reasonable to anticipate continuation in the short term — especially with these relatively stable market conditions.
Should this happen, euphoria will most certainly take off into a new paradigm. At this point, the pull-back scenario delineated a few weeks ago becomes even more pertinent.
A move back to the 20-weekly EMA would be the all-in signal for the next year or so (depending on the market cycle).
Catch you next time.